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Inspections
Negotiate on price with a building and pest inspection report
When buying a house, making wise financial decisions is crucial. Beyond the purchase price, there are numerous associated costs that come with buying a property, so it’s natural for homebuyers to want to minimise expenses and only pay for what is truly essential.
If you’re debating whether it’s worth spending a few hundred dollars on a building inspection, this article will cover the key things you need to consider.
You could avoid making a poor purchasing decision
A building and pest inspection is invaluable when you’re looking to buy a house. Conducting an inspection before making a purchase can save you from costly mistakes. If extensive damage is uncovered, you could avoid spending hundreds of thousands of dollars on repairs you didn’t anticipate.
For example, a termite infestation is a common reason buyers reconsider a property. If termites are found, the inspection report could prevent you from making a costly purchase that would otherwise waste a significant amount of your money.
A building and pest inspection can help you negotiate a better property price
A building and pest inspection can actually work in your favour by helping you negotiate a better property price. If the inspection uncovers significant damage or pest issues, you may be able to renegotiate the asking price based on the findings.
With the leverage of a building and pest inspection report, you could potentially save thousands of dollars. As Daniel Watts, Director of Rapid Building Inspections, notes, “We’ve had many clients thank us for our reports, as the issues we have identified have allowed them to negotiate up to tens of thousands of dollars off the price of a house.”
So, how do you use a building and pest inspection to negotiate on price? Consider the questions below.
Is there any major damage?
If your intention is to negotiate the price of the property, it’s advisable to have some understanding of how property value is calculated. Homes that are not brand new will of course have wear and tear from the previous residents whether they be the previous owners or tenants. Taking into account just how severe that damage is will be key. For example, a cupboard that has come off its hinge is a defect, but it’s a very easy fix.
Examples of potentially major issues include:
- A termite infestation
- Significant cracks or damage to the concrete stumps that support the house
- Severe rusting to the roofing
- Unauthorised building work
- Water penetration and rising damp
- Cracks to kitchen tiles, outdoor tiling, or roofing
- Cracked windows, dents in screen doors or garage doors
- Leaking taps
- Areas of rust Damage to the fence
- Stiff doors and windows that don’t open easily
- Chips or cracks in the porcelain of the toilet or bath
If you uncover any of the above issues in the property you would like to buy, you could negotiate a price reduction based on the estimated repair costs. It’s wise to get a quote from a builder or relevant repair professional and use this figure to negotiate with the seller. While this may not result in an overall saving since you will still need to pay for repairs- it can help you avoid overpaying for the property by reducing the purchase price to account for the necessary fixes to be made.
Is there any minor damage?
Some minor damages to consider include:
- Paint blemishes
- Damaged internal door handles
- Cracked or scuffed floor tiles in living areas
- Door and windows that don’t operate smoothly
- Missing light fittings
- Internal doors jamming
- Minor settlement cracking to walls
While each of the above minor damages are not particularly significant, as a collective they may be large enough that you could negotiate a better purchase price with the seller. Daniel Watts notes, “Our reports identify defects to the property therefore allowing the buyer to better estimate potential costs that they may incur if they purchase the property. They can then choose to absorb those costs or use the defects as a means to negotiate a better purchase price due to the potential costs associated with rectifying the identified defects.”
What is your purpose for buying?
Investors planning significant renovations can sometimes secure great deals on damaged properties. Serious issues, like a termite infestation, could work in your favour if you intend to tear down the existing structure and build something new. The seller doesn’t have to be aware of your plans, which may allow you to negotiate thousands of dollars off the asking price.
Similarly, major issues with concrete stumps can lead to significant savings. If the property is structurally unsound, the seller may have limited options, giving you leverage to negotiate a lower purchase price.
How many offers does the seller have?
To negotiate a better purchase price for a property requires both insight and skill. It is important to ask for a reduced price without overplaying your hand. One key factor that can influence your negotiation is understanding how many offers the seller has received. If you’re attending an open home inspection, observe how many other people are there. Are many attendees engaging in-depth with the real estate agent? Is the property in a popular area with a reasonable asking price?
If you’re competing with too many other buyers, your negotiation power may be limited. Pushing too hard for a price reduction could cause the seller to move on to another offer. However, if the seller doesn’t seem to have much interest from other buyers, you may have more leverage to discuss the property’s condition and present a counter-offer.
Is the seller in a hurry?
The timeline of the seller may also inform how willing they are to negotiate. Often a seller has bought a new property and is selling their current property. If their timeline is more pressing, they may be incentivised to close the sale as soon as possible. Leaving their home on the market as they move into their new property may be costly and you may find that they are happy to accept a price that has been adjusted down, in order to quickly close the sale.
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